Some of the main highlights of tonights Budget 2009 are as follows:

The Cost of Living Allowance -The Cost of Living Allowance (COLA) has been set at €4.08, which represents the €6.41 that should have been given according to the mechanism based on inflation, less the €2.33 already given last year in anticipation of the surcharge on utility bills.

As in previous years, pensioners will receive the whole of the Cost of Living Allowance.

Privitisation – The government has announced plans to complete the privatisation of Malta Shipyards and also privatise Enemalta’s petroleum division and the yacht marinas next year.

Penalties for late payment of income tax and VAT - Penalties for late payment of income tax and VAT are to be reduced from 12 percent to 9% per year, the monthly rate is being reduced from 1% to 0.75%. Both these changes come into effect on January 1st.

€0.50 per night hotel tax – An €0.50 per night tax is to be charged on stays in hotels and collective accomodation. This tax is to be used to offset the incentives being paid to low-cost airlines.

Embellishment of coastal zones and bastions – €120 million has been allocated for the embellishment of coastal zones at St Paul’s Bay, Qawra and Sliema and the beaches of Ghadira, Golden Bay, Ramla Bay, Sliema and Qawra. €36 million of this allocation is to be spent on the restoration of fortifications, with the Mdina bastions being given priority.

Tax bands revised – For single computation: The first band will be raised by €350 making the tax-exempt amount €8,500. The 25 per cent and 35 per cent bands will be raised by €500.

For joint computation: The first band will be raised by €500, making the tax-exempt amount €11,900. The 25 per cent and 35 per cent bands will be raised by €700.

New tax on petrol, diesel and traditional light bulbs – Petrol is to be taxed a further 3c5 per litre, diesel 2c per litre, traditional light bulbs will be taxed 25c and neon tubes 50c. This tax will be used to offset grants to be given on solar water heating systems, photovoltaic systems, roof insulation and double glazing.

Income tax break for mothers – Mothers who had a child after 2007 and have since returned to work are to be given a one-year income tax exemption. Mothers who return to work within five years of having a child will also benefit from a one-year income tax refund for every child under 16.

Cost of alcohol reduced, minimum drinking age raised – Excise duties on alcohol are to be reduced from January 1st to discourage people from going to Sicily to stock up and the minimum drinking age is being raised from 16 to 17.

Tobacco and cigarettes go up immediately – Excise on tobacco and cigarettes is being increased by 20c per packet with immediate effect.

Community work for long-term unemployed - Persons who have been unemployed for more than five years will be required to work a minimum of 30 hours per week in the community and will be paid 75% of the minimum wage.

Vehicle Registration tax changes – The vehicle registration tax will be reduced by 44% for vehicles up to 1000cc and by 28% for medium sized cars, however, larger more powerful cars will be taxed an additional 25% to 45% more.

Older vehicles to pay more – Vehicle licences will start to rise marginally for cars over seven years old, particularly in the case of diesel powered ones. This measure is intended to discourage the use of older cars.

Plastic bags to be taxed – A 15 cent eco-tax on plastic shopping bags is to be introduced, shops will be obliged to include the tax in the fiscal receipt whenever a plastic bag is given to customers.